Michalik v Earthquake Commission - [2014] NZHC 2238

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2013-485-3167 [2014] NZHC 2238

UNDER
THE JUDICATURE AMENDMENT ACT

1972

BETWEEN

P W MICHALIK Plaintiff

AND

EARTHQUAKE COMMISSION Defendant

Hearing: 12 May 2014

Counsel:

P W Michalik in person
J A Knight and N S Wood for Defendant

Judgment:

17 September 2014

JUDGMENT OF WILLIAMS J

Introduction

[1] Mr Michalik owns (as trustee) and occupies a residential property in Highbury. It suffered a small landslip following a significant rain event in July 2012. A small retaining wall collapsed causing the material it retained to evacuate on to the ground at the toe of the wall. The Earthquake Commission (EQC) accepted Mr Michalik’s claim. But it paid him a sum that was considerably less than the estimated cost of reinstating the land and replacing the retaining wall with a modern compliant one.

[2] Mr Michalik says EQC is required to meet the full cost of replacing the retaining wall with a wall that complies with relevant regulatory requirements. It is common ground that this would result in a replacement wall that was not only new,
but substantially better than its predecessor.

MICHALIK v EARTHQUAKE COMMISSION [2014] NZHC 2238 [17 September 2014]

[3] EQC says it is only required, in this case, to pay a sum equal to the pre-slip value of the damaged portion of the wall exactly as it was constructed and without regulatory betterment.

[4] Mr Michalik seeks judicial review accordingly. In particular, he seeks the following:

(a) an order that EQC's decision to adjust his claim on the basis of the value of the land under the wall is unlawful and set aside;

(b) an order that EQC reconsider his claim on the basis that:

(i)EQC is obliged under the EQC Act to indemnify him against the natural disaster damage to the retaining wall; and

(ii)the correct measure of indemnity is the amount required to restore him to the position he would be in had the disaster not occurred; and

(iii)a valuer's assessment of the value of the land under the damaged retaining wall is not the correct measure of indemnity to which he is entitled; and

(iv)he will be properly indemnified if EQC pays the costs of the necessary repairs to the retaining wall, given he cannot replace the retaining wall by purchasing an equivalent second hand wall and faces repairs having to be carried out on his property;

(c) costs.

The facts

[5] The retaining wall in question retained an area of earth and fill a few metres from, and downhill of, the dwelling on site. The wall was 1.5m high. It was made of hollow, triangular concrete blocks joined with mortar. The wall was neither

reinforced nor drained. It did not comply with modern Building Act 2004 requirements. The dimensions of the individual concrete blocks were 600mm x
200mm x 300mm. In July 2012, a 3.7m long section of the wall collapsed after heavy rainfall causing retained earth and fill to evacuate and inundate the level…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] NZHC 2238
Decision Date: 17 September 2014

CaseChat Overview and Summary

In Michalik v Earthquake Commission, Mr Michalik sought judicial review of the Earthquake Commission's (EQC) liability for damage to his property caused by a natural landslip. EQC had accepted liability but paid Mr Michalik less than the estimated cost of replacing the retaining wall. Mr Michalik argued that EQC should meet the full cost of replacing the retaining wall with one that complied with regulatory requirements. EQC contended it was only required to pay a sum equal to the pre-slip value of the damaged portion of the wall. The court had to decide whether EQC turned its mind to the "indemnity value" of the retaining wall when calculating Mr Michalik's entitlement, and whether EQC applied the correct methodology for assessing "indemnity value" when it adopted a "depreciated replacement value" approach. The court found that EQC had turned its mind to the "indemnity value" of the retaining wall and that its methodology for deriving the indemnity value of the wall was consistent with the terms of the EQC Act, relevant legislative history, and generally applicable principles of insurance law. Therefore, the application for judicial review was dismissed, and EQC was entitled to costs.

Orders